Available as of today.
Nintendo has announced in a blog post that PayPal is now available as a payment option when purchasing digital content on the Nintendo Switch in both the U.S. and Canada. Despite the blog post only mentioning North America, the option to use PayPal has been activated on the Switch in Japan and Europe as well.
Previously, only credit cards and Nintedo eShop cards were compatible. The next time you go to purchase digital content you will notice an additional option allowing you to sync up your PayPal account to your Nintendo Switch. It will then be automatically available for all future purchases in the checkout. You can also use PayPal on the Game Store on the main Nintendo website, which was already available previous to this announcement.
For those purchases on the WiiU and 3DS, the blog post states, “Linking your accounts will also allow you to use PayPal as a payment option on the Nintendo website when purchasing content for the Wii U console and the Nintendo 3DS family of systems.”
Since PayPal is globally accepted, this means purchasing games form the Japanese eShop will likely be easier when trying to buy games in foreign currency when some credit cards are not accepted.